The key to successfully managing these consolidated supply bases, Sharland adds, will be financially healthy collaboration. Here, he harkens back to the 1996 book Co-Opetition by Adam Brandenburger and Barry Nalebuff. He sees the OEMs already working together in markets where it makes sense, for the sake of speed to market, scale and capacity. “You’re going to see many of the tier-one suppliers working more tightly together, as well as the tier-twos, -three and -fours looking for ways to work together where each can contribute and maintain some level of financial integrity going forward.”
“Check the Ego”
As for AIAG’s current work with its members, Sharland highlighted three areas, including quality, corporate social responsibility and effective material management on a global scale. With regard to the first, the ongoing effort is to instill a more holistic view of quality throughout the supply chain. AIAG’s initiatives in this area focus on developing standards and tools to better manage quality collaboratively in all tiers. “The primary enemy of quality is variation, and we’re trying to drive that out by harmonizing the way we speak and using a common toolkit.” AIAG also is working to take reliability approaches from the truck and heavy equipment sector – where a truck’s lifespan expectation might be a million miles – and transfer those to the light truck and passenger side. And finally, the group is focused on identifying and standardizing best practices around warranties for the industry.
Sharland is optimistic about the industry’s prospects in the wake of the recession, and he’s confident that AIAG will continue to have a role in meeting the challenges ahead for the automotive supply chain, in no small part because of its unique position in the industry. “We’re not holding hands and singing Kumbaya about how it would be nice if we could all work together – we actually are working together.” The price, he adds, is that members of the group must be able to “check the ego at the door” and come willing to share ideas and accept the ideas of others. “We’re business process guys,” he concludes. “It’s not sexy, but it really works – and when it works, it works really, really well.”